In this example, an annuity pays 10,000 per year for the next 25 years, with an interest rate (discount rate) of 7%. The PV function is configured as follows in cell C9: The inputs to PV are as follows:
rate - the value from cell C7, 7%. nper - the value from cell C8, 25. pmt - the value from cell C6, 100000. fv - 0. type - 0, payment at end of period (regular annuity).
With this information, the present value of the annuity is $116,535.83. Note payment is entered as a negative number, so the result is positive.
Annuity due
With an annuity due, payments are made at the beginning of the period, instead of the end. To calculate present value for an annuity due, use 1 for the type argument. In the example shown, the formula in F9 is: Note the inputs (which come from column F) are the same as the original formula. The only difference is type = 1.
Dave Bruns
Hi - I’m Dave Bruns, and I run Exceljet with my wife, Lisa. Our goal is to help you work faster in Excel. We create short videos, and clear examples of formulas, functions, pivot tables, conditional formatting, and charts.
